Lawmakers Unite to Oppose GM Plant Closures, Layoffs

November 26, 2018

5mo ago

By Carlo Versano

Politicians on both sides of the aisle united with labor leaders on Monday to slam GM's announcement that it would cut more than 14,000 jobs ー a combination of factory and office roles ー and put five plants on the chopping block.

President Trump said he told General Motors CEO Mary Barra that he was not pleased with the decision, which was driven by shifting consumer preferences, slowing sales, and a sea change in mobility.

"The United States saved General Motors and for her to take that company out of Ohio is not good," Trump told reporters on Monday. "I think she's going to put something back in soon." Before he was inaugurated, Trump had praised GM ($GM) for a "big jobs push back into the U.S."

Ohio Sen. Sherrod Brown, who is publicly flirting with a run for the Democratic presidential nomination in 2020, said the move was "corporate greed at its worst."

The UAW said the decision would "not go unchallenged," while Larry Kudlow, Trump's chief economic adviser, summoned Barra to the White House in a sign of how seriously the White House takes the issue of major cost-cutting at an American automaker.

But for Barra, it made sense to initiate a massive forward-looking pivot at the automaker when the economy is healthy, rather than later, when it may not be ー a lesson GM learned the hard way when it nearly collapsed during the financial crisis.

"We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions," Barra said in a conference call with investors.

They responded favorably, sending shares of GM up as much as seven percent Monday.

With gas prices low, buyers have sought out bigger cars, including pick-ups and crossover SUVs, which has put pressure on carmakers like Ford ($F) and several of GM's brands, like Cadillac, Buick, and Chevy. Earlier this year, Ford said it would kill off its sedan lines in the U.S. due to low demand. That's also happening amid a broader change in the very foundation of mobility as rideshare partnerships and autonomous and electric development take on a larger role and drivers cast aside legacy automakers.

GM explicitly mentioned investments in autonomous and electric R&D in its announcement.